Do Product Architectures Affect Innovation Productivity in Complex Product Ecosystems?
Collaboration and Competition in Business Ecosystems
ISBN: 978-1-78190-826-6, eISBN: 978-1-78190-827-3
Publication date: 26 August 2014
In this paper, we seek to understand how changes in product architecture affect the innovation performance of firms in a complex product ecosystem. The canonical view in the literature is that changes in the technological dependencies between components, which define a product’s architecture, undermine the innovation efforts of incumbent firms because their product development efforts are built around existing architectures. We extend this prevailing view in arguing that component dependencies and changes in them affect firm innovation efforts via two principal mechanisms. First, component dependencies expand or constrain the choice set of firm component innovation efforts. From the perspective of any one component in a complex product (which we label the focal component), an increase in the flow of design information to the focal component from other (non-focal) components simultaneously increases the constraint on focal component firms in their choice of profitable R&D projects while decreasing the constraint on non-focal component firms. Second, asymmetries in component dependencies can confer disproportionate influence on some component firms in setting and dictating the trajectory of progress in the overall system. Increases in such asymmetric influence allow component firms to expand their innovation output. Using historical patenting data in the personal computer ecosystem, we develop fine-grained measures of interdependence between component technologies and changes in them over time. We find strong support for the empirical implications of our theory.
We thank Gautam Ahuja and Anita McGahan for useful comments on an earlier version of this paper. We also thank executives at IBM, Intel, Texas Instruments, and the staff at CHI Research and the Office of Technology and Forecasting for help with mapping patent classes to component industries. Responsibility for all remaining errors and omissions is our own.
Ethiraj, S.K. and Posen, H.E. (2014), "Do Product Architectures Affect Innovation Productivity in Complex Product Ecosystems?", Collaboration and Competition in Business Ecosystems (Advances in Strategic Management, Vol. 30), Emerald Group Publishing Limited, Bingley, pp. 127-166. https://doi.org/10.1108/S0742-3322(2013)0000030008
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